- 5 -
to reopen account no. 567-96135. Merrill Lynch provided
$2,948,702 of margin funds and petitioner deposited fresh funds
of $1,350,000 (which he had borrowed from his father) into the
account to purchase WalMart and to reestablish petitioner's
position in WalMart common stock. At petitioner's direction,
Merrill Lynch acquired 96,6002 shares of WalMart common stock on
his behalf for the account for a total purchase price of
$4,298,702. Merrill Lynch waived the purchase commissions and
located year end sellers of stock which had recently increased
substantially in value.
Petitioner had borrowed the $1,350,000 from his father, as
noted above, in order to complete the December 28, 1989,
purchase. Prior to that time, petitioner was not indebted to his
father for the purchase of any WalMart shares. The parties
stipulated that petitioner's purpose for the December 28 purchase
was to reacquire his investment in WalMart and to formally
implement a rescission of the January 3 sales in the same year by
attempting to bring the case within situation one of Rev. Rul.
80-58, 1980-1 C.B. 181, hereinafter described. The IRS did not
stipulate that petitioner's action accomplished a rescission.
Petitioners filed a formal arbitration claim for rescission
against Merrill Lynch with the National Association of Securities
2 Petitioners do not contest the sale of the first 3,400
shares, since their sale approximates the $100,000 worth of
Walmart stock petitioner unquestionably authorized.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011